Abstract

The concept of sustainable growth rate was originally developed by Robert C. Higgins. In the case of companies with given stable financial policies, it is considered to be the link between growth-return rate combinations that gives a balanced growth line. This indicates the possibilities for a company to grow without generating deficits or cash surpluses. Increased sales require more assets, which can be financed by new debt, external equity, and internal equity through retained earnings. The sustainable growth rate is the maximum rate at which company sales can increase without decreasing its financial resources. The aim of this paper is to determine if the last year most traded companies on the Bucharest Stock Exchange (BSE) have registered growth and if it was a sustainable one. Our research is based on two hypotheses: (1) the analyzed companies have a constant growth and the growth is sustainable and (2) the main factor that is influencing SGR is the retention rate. The results are only partially validating these hypotheses.